The KKR report added to investor worries about world economic health in view of rising oil prices that have prompted inflation fears. U.S. crude oil futures breached the $100 level on Tuesday.

Japan's Nikkei 225 Average slid more than 3 percent to its lowest close in a week, with the KKR report spooking investors into locking in profits. Sentiment had already been worsened by a fall in Sumitomo Realty & Development and other property shares, and selling of banks such as Sumitomo Mitsui Financial Group picked up in late trade.

Hong Kong stocks fell 2.2 percent, as declines on Wall Street and other Asian markets prompted investors to book recent gains in sectors such as telecoms. But some commodities-related shares were higher after crude prices hit a record and copper and gold prices surged. The Hang Seng Index started stronger but then reversed course, accelerating its losses.

Singapore's Straits Times Index was down 2.3 percent with banks such as United Overseas Bank and DBS Group dragging on the market.

China's Shanghai Composite Index fell 2.1 percent, led by banks, in response to a plan for a massive share sale by Pudong Development Bank. The bank's plan to raise roughly 40 billion yuan ($5.6 billion) by selling new shares in the first half of this year was widely rumored in the market, and confirmed to Reuters by people briefed on the situation. The prospect of the new share supply -- which could be China's largest equity refinancing -- sent Pudong Bank shares plunging and dragged down stocks across the board because of concern about the market's ability to absorb the fresh equity.